EQ Inc. Reports Second Quarter Financial Results

TORONTO, ON / ACCESSWIRE / August 1, 2019 / EQ Inc. (TSXV: EQ) (“EQ Works” or the “Company”), a leader in driving location behavioural data and intelligence, announced its financial results today for the quarter ended June 30, 2019.

Revenue for the second quarter was $2.2 million, an increase of 66% when compared to the second quarter of 2018 and an increase of over 57% sequentially. This revenue growth is due in large part to new data engagements entered into during the year and a rise in spending from both new and existing clients. Gross margin of 49% is significantly stronger than last year, again resulting from the increased data revenue. Adjusted EBITDA loss for the quarter was approximately $0.1 million, a significant improvement from the loss of $0.4 million experienced the previous quarter.

Highlights for the Second Quarter ended June 30, 2019

  • Revenue increased by 66% year over year and 57% sequentially
  • Data revenue increased by 170% year over year and 56% sequentially
  • 22 new clients were on boarded during the second quarter of 2019 and 40 new clients for the first half of the year
  • 3 new data partners were integrated during the quarter onto the LOCUS marketplace
  • New business intelligence (BI) analysis and reporting along with AI forecasting tools were implemented during the quarter to allow users to build customized reports relevant for their businesses

“We are very pleased with our revenue growth and even more excited about our data revenue increasing by 170% compared to last year. We are continuing to see strong demand for our proprietary data platform LOCUS as our ability to make data actionable is providing value for our clients.” said Geoffrey Rotstein, President and CEO of EQ Works. “Data driven solutions will drive the future in all categories and the investments we have made position us extremely well. The market is growing, our client pipeline is very strong and we continue to reinforce our position as a market leader. Given all of this momentum, we expect that year over year revenue growth for the third quarter will be at least as high as what was generated in the second quarter.”

Non-IFRS Financial Measures

EQ Works measures the success of the Company’s strategies and performance based on Adjusted EBITDA, which is outlined and reconciled with net income (loss) in the section entitled “Reconciliation of Net Loss for the period to Adjusted EBITDA” in the MD&A. The Company defines Adjusted EBITDA as net income (loss) from operations before: (a) depreciation of property and equipment and amortization of intangible assets, (b) share-based payments, (c) finance income and costs, net, and (d) depreciation of right-of-use assets. Management uses Adjusted EBITDA as a measure of the Company’s operating performance because it provides information on the Company’s ability to provide operating cash flows for working capital requirements, capital expenditures, and potential acquisitions. The Company also believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate the overall operating performance of companies in its industry.

The non-IFRS financial measure is used in addition to and in conjunction with results presented in the Company’s consolidated financial statements prepared in accordance with IFRS and should not be relied upon to the exclusion of IFRS financial measures. Management strongly encourages investors to review the Company’s consolidated financial statements in their entirety and to not rely on any single financial measure. Because non-IFRS financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-IFRS financial measures having the same or similar names. In addition, the Company expects to continue to incur expenses similar to the non-IFRS adjustments described above, and exclusion of these items from the Company’s non-IFRS measures should not be construed as an inference that these costs are unusual, infrequent or non-recurring.

The table below reconciles net loss from operations and Adjusted EBITDA for the periods presented:

Adjusted EBITDA for three and six months ended June 30, 2019 and 2018

(In thousands of Canadian dollars)

Three months ended June 30,

Six months ended June 30,

2019

2018

2019

2018

Net loss

(302)

(590)

(827)

(1,158)

Add:

Finance costs, net

136

151

191

317

Depreciation of property and equipment

14

10

27

20

Amortization of intangible assets

11

22

Share-based payments

13

3

42

6

Depreciation of right-of-use asset

43

85

Adjusted EBITDA

(85)

(426)

(460)

(815)

About EQ Works

EQ Works (www.eqworks.com) provides a smarter way to target customers. Using first-party, location-based behaviour signals, advanced data analytics, and proprietary software, EQ creates and targets customized, performance-boosting audience segments. Proprietary algorithms and data generate attribution models that connect consumer behaviour in the physical world to consumer behaviour in the digital world, solving complex challenges for brands and agencies.

Neither the TSX-V nor its Regulation Services Provider (as that term is defined in policies of the TSX-V) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements”. All statements other than statements of historical fact contained in this press release, including, without limitation, those regarding the Company’s future financial position and results of operations, strategy, plans, objectives, goals and targets, and any statements preceded by, followed by or that include the words “believe”, “expect”, “aim”, “intend”, “plan”, “continue”, “will”, “may”, “would”, “anticipate”, “estimate”, “forecast”, “predict”, “project”, “seek”, “should” or similar expressions, or the negative thereof, are forward-looking statements. These statements are not historical facts but instead represent only the Company’s expectations, estimates, and projections regarding future events. These statements are not guarantees of future performance and involve assumptions, risks, and uncertainties that are difficult to predict. Therefore, actual results may differ materially from what is expressed, implied or forecasted in such forward-looking statements. Additional factors that could cause actual results, performance or achievements to differ materially include, but are not limited to, the risk factors discussed in the Company’s MD&A for the three and six months ended June 30, 2019. Management provides forward-looking statements because it believes they provide useful information to investors when considering their investment objectives but cautions investors not to place undue reliance on forward-looking information. Consequently, all of the forward-looking statements made in this press release are qualified by these cautionary statements and any other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. These forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update or revise them to reflect subsequent information, events or circumstances or otherwise, except as required by law.

EQ Inc.
1235 Bay Street, Suite 401| Toronto, Ontario |M5R 3K4
press@eqworks.com
www.eqworks.com

EQ Inc.
Unaudited Consolidated Interim Statements of Financial Position
(In thousands of Canadian dollars)
June 30, 2019 December 31, 2018
Assets
Current assets:
Cash
$ 310 $ 584
Restricted cash
30
Accounts receivable
2,114 2,167
Other current assets
316 293
2,770 3,044
Non-current assets:
Property and equipment
108 125
Right-of-use asset
452
Intangible asset
309 206
Goodwill
685 535
1,554 866
Total assets
$ 4,324 $ 3,910
Liabilities and Shareholders’ Deficiency
Current liabilities:
Accounts payable and accrued liabilities
$ 1,921 $ 1,851
Lease liability
170
Loans and borrowings
2,001 1,577
Deferred revenue
227 348
Earn-out
463 291
4,782 4,067
Non-current liabilities:
Lease liability
282
Earn-out
239 214
521 214
Shareholders’ deficiency
(979 ) (371 )
Total liabilities and Shareholders’ deficiency
$ 4,324 $ 3,910
EQ Inc.
Unaudited Consolidated Interim Statements of Loss
(In thousands of Canadian dollars, except per share amounts)
Three and six months ended June 30, 2019 and 2018
Three months ended June 30, Six months ended June 30,
2019 2018 2019 2018
Revenue
$ 2,207 $ 1,330 $ 3,613 $ 2,212
Expenses:
Publishing costs
1,127 773 1,807 1,231
Employee compensation and benefits
705 560 1,438 1,059
Other operating expenses
473 426 870 743
Depreciation of property and equipment
14 10 27 20
Depreciation of right-of-use asset
43 85
Amortization of intangible assets
11 22
2,373 1,769 4,249 3,053
Loss from operations
(166 ) (439 ) (636 ) (841 )
Finance income
1 9 1
Finance costs
(137 ) (151 ) (200 ) (318 )
Loss before income taxes
(302 ) (590 ) (827 ) (1,158 )
Net loss
(302 ) (590 ) (827 ) (1,158 )
Loss per share:
Basic and diluted
(0.01 ) (0.01 ) (0.02 ) (0.03 )
EQ Inc.
Unaudited Consolidated Interim Statements of Cash Flows
(In thousands of Canadian dollars)
Six months ended June 30, 2019 and 2018
2019 2018
Cash flows used in operating activities:
Net loss
(827 ) (1,158 )
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation of property and equipment
27 20
Depreciation of right-of-use asset
85 0
Amortization of intangible assets
22 0
Share-based payments
42 6
Unrealized foreign exchange (gain) loss
8 (5 )
Finance costs, net
191 290
Change in non-cash operating working capital
(21 ) (131 )
Net cash used in operating activities
(473 ) (978 )
Cash flows from financing activities:
Repayment of loans and borrowings
(2,184 )
Repayment of obligations under property lease
(85 )
Bank loan
284
Issuance of promissory notes
1,534
Proceeds from exercise of warrants
616
Proceeds from equity financing, net of issuance cost
176 914
Proceeds from exercise of stock options
1
Interest paid
(6 ) (354 )
Net cash from financing activities
370 526
Cash flows used in investing activities:
Interest income received
2 1
Investment in GIC
(30 )
Purchase of property and equipment
(10 ) (14 )
Addition to intangible asset
(125 )
Net cash used in investing activities
(163 ) (13 )
Decrease in cash
(266 ) (465 )
Foreign exchange gain (loss) on cash held in foreign currency
(8 ) 5
Cash, beginning of the period
584 891
Cash, end of period
$ 310 $ 431

SOURCE: EQ Inc.

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